Latest US economic data shows layoffs are falling and prices are rising
The Labor Department said new applications for unemployment benefits, a proxy for layoffs, fell from 329,000 last week to a seasonally adjusted 293,000 last week. It marked the first week since the Covid-19 pandemic began in March 2020 that jobless claims fell below 300,000. A proxy of the number of people receiving unemployment benefits, it also fell to its lowest level since March 2020.
A separate report from the Labor Department showed steady inflationary pressures. The producer-price index for final demand – a gauge of the prices suppliers are charging businesses and other customers – rose 8.6% in September from a year earlier. It was the biggest advance in 12 months since the series debuted in 2010.
Last month’s increase was driven by rising gasoline prices, but also reflected more expensive meat, vegetables, residential electricity and chemicals. The Labor Department said this week that the more closely watched consumer-price index rose 5.4% in September from a year earlier, its biggest annual gain since 2008.
“The deteriorating supply-side dynamics and the recent bullish in commodity prices will continue to hold price pressures and extend well into next year,” said Mahir Rashid, a US economist at Oxford Economics.
Meanwhile, the latest jobs market data points to a limited supply of workers. The report showed that the number of unemployment claims issued, a proxy for those receiving benefits through state programs, stood at 2.6 million in the week ending October 2, a pandemic low.
“The large drop in unemployment claims … is the strongest evidence yet that the COVID-19 delta wave has lost its impact on layoffs,” Robert Frick, corporate economist at Navy Federal Credit Union, said in a note.
Layoffs are falling from last year’s highs as companies lay off their workforce and try to fill positions amid strong demand. Job opportunities hit record highs this summer, although some fell in August. Americans are leaving their jobs at historically high rates, a sign of workers’ confidence in the job market. According to the Labor Department, about 4.3 million workers left their jobs in August, the most for a record up to 2000.
While employees who leave their jobs voluntarily are not eligible for unemployment benefits, they can often receive higher wages from new employers. According to the Labor Department, average hourly earnings for private sector workers rose 4.6% in September from a year earlier, the strongest gain since February.
Job creation slowed in September, but many economists say it reflects a persistent labor shortage. The share of Americans working or seeking work fell to 61.6% in September from 61.7% in August and is well below February 2020 levels.
“Employers are trying to figure out how to attract job seekers, and it’s challenging,” said Ann Elizabeth Konkel, an economist at the job site Indeed.
Many economists expect labor shortages to persist for a long time, including accelerating retirements, preventing workers from looking for jobs. Some, however, think that labor shortages due to the pandemic, school reopenings and unemployment benefits ending will compound this decline.
The number of Americans receiving unemployment benefits overall is declining after programs designed to respond to the pandemic’s impact on the labor market ended in all states last month.
One of those programs provided payments to gig workers and others who typically weren’t eligible to tap unemployment insurance. Another expanded payment to people who have exhausted state benefits. In addition, the federal government funded an increase of $300 per week for all unemployment programs.
Continuing claims, a proxy for recipients of payments for pandemic programs, and others all fell from about 3.65 million at the end of September to about 12 million at the end of August, before pandemic aid ended nationwide. That data is not adjusted seasonally and is reported at a delay of several weeks.
Some states have continued to file pandemic claims in the weeks after the program ended, possibly reflecting the remaining backlog in payments.
—Gwyn Guilford contributed to this article.
[email protected] . But Sarah Chaney Cambon